SC dismisses SpiceJet's plea against Delhi HC order grounding 3 aircraft engines

Representation Image

The Supreme Court on Friday approved an order of the Delhi High Court which directed the low-cost airline SpiceJet to ground three aircraft engines due to non-payments to lessors, PTI reported.

According to PTI, A bench comprising Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra dismissed the appeal filed by SpiceJet against the Delhi High Court verdict of September 11.

"We will not interfere. It's a correct order," the bench said.

After the SC order, SpiceJet spokesperson said the company is currently in discussions to reach an amicable settlement with the aircraft lessor.

"It is important to note that two of the three engines in question are already grounded, and our operations remain completely normal and unaffected. We remain committed to ensuring seamless operations," the SpiceJet spokesperson said to PTI.

A division bench of the High Court affirmed a single-judge court's judgment directing the low-cost airline to halt the three engines owing to payment delinquency, ruling that the carrier had breached an agreed-upon temporary arrangement for payment of dues.

The single-judge bench of the Delhi High court on August 14 directed SpiceJet to ground three engines by August 16 and hand them over to their lessors - Team France 01 SAS and Sunbird France 02 SAS.

The division bench of the high court had refused to interfere with an August 14 order of the single-judge bench to ground the three aircraft engines and hand them over to the lessors, and disposed of SpiceJet's appeals against it, PTI reported.

SpiceJet challenged the August 14 order of the single-judge bench.

"The appeals are emblematic of the adage that fools create assets and wise men use them. The use of a lessor's assets without recompense, on agreed terms, by the lessee often leads to consequences which disrupt the interests of both sides," the high court had said.

According to the high court, SpiceJet was in default and there were still unpaid past and present outstanding debts. This was evident from the records.

"The fact that the financial condition of SpiceJet is weak is evident from its conduct and the stand taken on its behalf in court, which is that it is attempting to infuse funds through loans and/or equity."

It added the lessors might lose both their assets, the engines and the money, if they are stopped from using their contractual rights at this point.

"The position in which SpiceJet is at this juncture, Team France and Sunbird France could well end up both without its engines or the monies due under the engine-lease agreements. Therefore, compensation in terms of money does not seem probable from the point of view of Team France and Sunbird France," it had said.

The single judge had passed the order on pleas moved by the lessors asking SpiceJet to transfer ownership of the three engines upon the expiration of the lease agreements

According to PTI, It was stated in the pleas that following the termination, the plaintiffs had directed the airline to ground and re-deliver the engines and pay all outstanding dues, but the carrier had failed to do so.

"It is, however, clarified that the defendant will remain liable for making payments, which it undertook in an order dated May 29, 2024, towards the admitted outstanding of USD 4.8 million and towards the weekly payments arising on account of the use of the engines under the aegis of this court."

"The return of the engines does not absolve the defendant from its liability for the payments, which have admittedly fallen due, and to that extent, the plaintiff is entitled to recover the said amount from the defendant through execution of the order dated May 29, 2024," the court had said.

It had said that SpiceJet is a "defaulter and has no legal and contractual right to continue the use of the engines".

In its response to the applications, the airline's counsel had submitted that after filing the suit, the defendant made a payment of USD 7.18 million between December 14, 2023 and May 24, 2024.

The airline's attorney had stated in its response to the petitions that after filing the lawsuit, the defendant paid USD 7.18 million between December 14, 2023, and May 24, 2024.

The airline paid USD 1.48 million after the settlement conditions were recorded in court, according to the attorney, and as of August 12, there was an acknowledged default to the tune of USD 2.67 million toward the remaining balance.

He had stated that although the defendant acknowledges that there has been a default, it is attempting to make these defaults more regular and had requested an extension of time until September 30 to settle the outstanding balance.

(With Inputs from PTI)